Offer in Compromise with Former Spouse
My husband and is former spouse owe the IRS in excess of $24K for 1996 taxes (taxes, interest, & penalty). During the divorce, the amount was divided evenly between the parties. The former spouse wants my husband to submit an offer in compromise jointly with her. Our annual income is in excess of $90K; our total debt is less than $10,000; her income is substantially lower, and her debt is much higher. In addition, she owns a $250 home, with $70K equity...we are not homeowners at this time due to the fact that we now live in Europe. I suggested she make an offer in compromise independently from us. I also suggested that my husband & I ask the IRS to abate the penalty (one can hope) and make installment payments on the balance. Please let me know your opion regarding a joint offer in compromise, and please let me know if there is a process by which the IRS will separate the balance due and establish 2 separate accounts, one for her and one for us. Your help is greatly appreciated.
2 Answers from Attorneys
Re: Offer in Compromise with Former Spouse
You're in a difficult position, unfortunately. The IRS likely will not agree to split the liability, unless your husband can qualify for innocent spouse relief. His ex probably could get off the hook through an offer in compromise, leaving your husband to pay the remainder of the tab.
You actually may want to consider doing the joint offer in compromise. It has some disadvantages, but it has the advantage of her agreeing to make some contribution, albeit modest, to the liability.
The other route to go would be to apply jointly with the ex for some type of installment arrangement, if the IRS would go for it.
I wish I could be more helpful, but this is a difficult situation.
Re: Offer in Compromise with Former Spouse
With the income as such, and equity, it probably would not work.
Joel Selik
www.taxworkout.com
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